Monthly Archives: March 2018

I would like to wish everyone a safe and happy Easter weekend. I know the weather is colder but I hope family time is fun and enjoyable.

As far as the markets go, WTI crude has settled down. The geopolitical issues have relaxed and WTI closed below $65/barrel this week. Whew!… I hope that we have peaked on crude pricing going into the spring. With the close of Q1, we will see if there is some profit taking on the WTI trade starting in April. Crude inventories did increase this last week. And although refinery maintenance has been minimal keep utilization high, crude production ticked up another 100k barrels/day last week. Right now the U.S. has Russia production levels in their sites. We might be able to surpass Russia by the end of the year which could put the OPEC deals in jeopardy.

In local news, gasoline prices have peaked going into the Easter weekend. Diesel prices have remained somewhat flat. With the change in RVP to summer on gasoline, I don’t expect to see prices come down on gasoline until WTI drops in price.

Propane prices have been steady due to the cold weather. I am expecting to see good demand yet through mid-April. Hopefully we will see some more price relief on propane going into May. More info on summer fills and next year’s heating contracts will be coming out in few months.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.

I was out of the office for a week and it’s amazing how volatile the crude market is right now. Two weeks ago we were just about to break back down below $60/barrel on WTI. Two weeks later we are sitting above $65/barrel! In fact, the last three trading sessions were the largest increases on WTI in trading since November of 2017. Most of this was driven by a surprise drawdown in crude inventory here in the U.S. as well as geopolitical tensions in the Middle East. Right now Saudi Arabia is demanding that Iran be curbed further from nuclear development or else they will develop a nuke. The Crown Prince is meeting with Trump to decide how to proceed with Iran. Some are thinking that the tensions could lead to sanctions on Iran and diminish Iran’s output causing world levels of crude inventory to go into deficit, riding the back of Venezuela’s significant decline. However, I do not believe that Iran’s customers would follow through with sanctions, considering that they like the current deal with Iran. Since Iran was agreed upon to open its doors for crude sales, China, India, and Europe are now buying more crude from Iran than ever before. With Iran’s steep discounts and trying to gain market share if possible, I do not see these countries following a lead by the U.S. in calling for sanctions. This is the largest geopolitical development since the middle of the Syria conflict when Russia and the U.S. got involved. Although I think this is significant news, I do not think there is enough “news” to push crude much higher. The inventory projections from both the EIA and IAA change every week. I agree with the thought that WTI crude will continue to trade in the $60-65/barrel range. However, my call of a “calm spring” for planting season is now a bit shaken. I am now urging some to cover costs in spring just a bit to be safe. And the last bit to remember is that we are coming to the end of Q1 and if crude prices hold, some traders might “ring the register” on a nice start of the year bump in profit and move money elsewhere. That would not be the first time we see the “selling in March” scenario.

In local retail news, gasoline prices have spike due to the change in RVP for summer. I believe that the retail price of $2.49/gallon will be about the peak for now. Where we go from here will all depend upon crude pricing. Diesel prices are jumping all over due to market volatility and street price volatility unwinding from winter blends. As with gasoline, the current prices will probably hold unless crude can find some legs and break out to the highest close of the year.

Propane has bounced back up off its lows with the increase in crude. We are still hoping to be able to lock in prices for next heating season very close to what we were at this year. Right now there is not much value in future prices until the market can digest this recent uptick in crude prices and the unwinding of winter heating demand. More information to come in the following months.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.

Not too much to report this week. WTI crude oil is dancing with breaking back down below $60/barrel. A stronger dollar and continued increases in crude production and products in the U.S. is putting pressure on prices. Although OPEC is really pushing the success of their agreed upon agenda, I am skeptical the agreement will hold for the rest of the year. The good news is that if we continue on this path, we will have descent retail prices across the country for the year which is good for the economy. I think that we are back in a pattern where any bit of news is going to push us either to $59/barrel or $64/barrel on WTI. So until anything drastically changes, we are going to dance back and forth for a while.

In local news, we are seeing diesel prices starting to fall with the price of crude as well as major winter blending components coming out of the market. Gasoline prices are holding a bit steady with a small concern on supply going into spring with refinery maintenance. I don’t see any major price spikes in gasoline ahead, just not as big of a drop as expected in relation to crude.

Propane prices are continuing to drop with the winter starting to wind down and major deep freezes behind us. I expect contract prices and board prices to even up by the middle of April. As far as next year goes, we are seeing prices for next winter being very good in comparison to this year. Contract information and summer fill prices will be released sometime after June. More to come.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.

As I stated before, I believed the claw back on crude was too quick and would correct at some point in March. Well, we are at March 2nd and WTI is close to breaking back below $60/barrel! As I like to say, what a difference a week makes! Oil production is continuing to rise and stocks are building again in the U.S. going into the spring maintenance season. OPEC is getting wavy on commitments due to the U.S. has Russia in their sights to overtake on production. Also, our dollar is finally gaining back some strength from the recent sell off a couple weeks back. And just like that, crude prices fall $4/barrel. I don’t think we are out of the woods yet. Crude might tumble a bit more, but I feel that crude will trade in the $55-$60/barrel average range for maybe the year if all components stay constant.

In local retail news, I am suggesting that all farmers lock in some portion of fall fuel needs at this time. We have some excellent prices and I believe one should hedge the supply crunch that always occurs in October and November due to the harvest and refinery maintenance. Gasoline retail prices will remain somewhat in the current range due to the change in RVP for summer. This change adds a premium cost to gasoline. As the temperatures rise and costs of product fall, I expect to see diesel prices at the pump come down a little bit. Most of this will be from retailers no longer having to blend products with #1 diesel to meet winter usage needs.

Propane prices are falling off as predicted. We are not locking in next season contracts for customers yet, but the numbers are looking very good for next heating season in comparison to this year. We suggest that all customers fill their tanks this summer and lock in prices when available this summer. More information will available in the coming months.

As always, if you have any questions, comments, or concerns, please feel free to give us a call.